Conflict-of-interest disclosure: Story Homes is a wholesale cash buyer operating in Southern California. We have a direct financial interest if you sell to us. This article is written to be useful whether you sell to Story Homes, to another buyer, or through a traditional listing. Every section that benefits our business says so plainly.
Before You Sign Anything: Know How the Number Was Built
Cash buyers do not pick a number out of thin air. They run a formula. Understanding it lets you sanity-check any offer you receive, from us or anyone else.
ARV minus repairs minus margin equals your offer.
- ARV (after-repair value) is what your home would sell for on the open market after it has been fully renovated. Buyers pull this from recent comparable sales within roughly a half-mile.
- Estimated repair cost is the buyer’s contractor bid for everything needed to bring the home to retail condition.
- Buyer margin is the profit the buyer needs to make the deal worth doing. Wholesale buyers typically target 10-20% of ARV.
Worked example. Say your home’s ARV is $550,000. The buyer estimates $60,000 in repairs and wants a 15% margin ($82,500). The math: $550,000 − $60,000 − $82,500 = $407,500 offer. That is about 74 cents on the dollar, well below retail, but the seller avoids repair costs, agent commissions (~5-6% of sale price, per NAR, 2023), and months of carrying costs.
If a buyer quotes you $407,500 and you later get quotes showing repairs cost only $30,000, the margin jumps to $112,500, or 20.5%. That is information worth having before you sign.
Industry estimates suggest cash buyers pay roughly 8-15% below retail market value on average (Zillow Research, 2024 methodology note: based on iBuyer transaction data; wholesale buyer discounts may run wider). A home in fair condition in a competitive Inland Empire zip code will land differently than a fire-damaged property in a slow market. The formula above is your tool for checking which end of that range you are on.
Who Is Actually Making You a Cash Offer?
Wholesalers (including Story Homes) do not plan to own your home long-term. They put it under contract, then assign that contract, or close and immediately resell, to an end investor. Under California AB 968 (effective January 1, 2024), any person or entity that assigns a residential purchase contract must disclose that they are a wholesaler in writing before you sign. If a buyer does not make that disclosure, they are in violation of state law. Ask every buyer directly: “Are you the closing buyer, or will you assign this contract?”
Contract assignment means the entity you signed with is not the entity that shows up at closing. Your rights under the contract transfer to the assignee. Demand a clause that prohibits assignment without your written consent, or at minimum requires you to be notified of any assignee’s name and proof of funds before closing.
iBuyers (Opendoor, Offerpad, and similar platforms) are institutional direct buyers. They use automated valuation models, close in their own name, and typically offer a tighter discount (5-8% below retail) than a traditional wholesaler, but they charge service fees that offset part of that gap. They operate in select metros and do not cover most of Southern California’s distressed-property stock.
Individual investors and private equity funds buy in their own name or through a single-purpose LLC. They range from solo flippers with $200,000 in a bank account to funds managing hundreds of millions. The offer math and contract terms vary widely.
For sellers in the areas we buy, Story Homes operates as a wholesaler. We disclose that in every contract we present.
How the Process Works, Step by Step
Step 1: Get the Offer
Step 2: Review the Contract
1. Assignment clause. Does it allow the buyer to transfer the contract to a third party without your consent? Strike it or add a written-consent requirement.
2. Inspection contingency. How broad is it? A clause that lets the buyer renegotiate price for any reason found in inspection is a blank check for a post-inspection price cut (see the section below).
3. Earnest money. Is it refundable? Under what conditions? A buyer who offers $1,000 EMD on a $400,000 deal has almost nothing at risk if they walk.
4. Closing date. Is it firm? Is there a penalty or automatic extension clause if the buyer misses it?
California Civil Code §1102 requires sellers to complete a Transfer Disclosure Statement (TDS) even in as-is cash sales. “As-is” limits your obligation to repair, it does not eliminate your obligation to disclose known material defects. A buyer who tells you no TDS is needed in a California transaction is wrong.
Step 3: Inspection & Renegotiation
This mechanic, a full-price offer followed by a post-inspection reduction, is common enough that sellers should plan for it. Your options when it happens:
Accept the reduced price. Sometimes the repair estimate is fair and the new number still works for your situation.
Counter with a partial reduction. If you have your own contractor quotes, use them. A buyer claiming $40,000 in roof damage should be able to show you the bid.
Walk away. If the reduction is large and unsupported, and the EMD is refundable, the buyer loses little by pressing you. Know before you sign whether you have the right to keep the earnest money if you terminate after an unwarranted re-trade.
Contract language that limits renegotiation: “Buyer accepts the property in its present condition as disclosed in the TDS. Inspection contingency is for information only and does not provide a basis for price reduction.” Not every buyer will accept this language, but asking for it tells you something about how they operate.
Step 4: Title Search, Lien Search, and Closing
If your title is clouded, say, by a mechanic’s lien from a contractor dispute, the buyer’s title company flags it. You then either pay it off at closing from proceeds, negotiate for the buyer to handle it, or resolve it before closing. Unresolved liens do not disappear; they follow the property. A HELOC payoff adds a wrinkle specific to cash sales. Most HELOCs have a payoff-processing window of 5-15 business days at the lender’s discretion. An 8-17-day close is tight if you carry a HELOC, confirm the payoff window with your lender before you agree to a closing date.
Closing mechanics, in order:
1. Both parties sign the purchase agreement and closing disclosure.
2. Buyer wires funds to the escrow/title company.
3. Escrow confirms funds received, then wires your mortgage payoff to your lender.
4. Deed records with the county.
5. Escrow wires your net proceeds to your designated account, typically same-day or next business day after recording.
Step 5: Your Net Proceeds
| Item | Example ($550,000 ARV home, $407,500 offer) |
|---|---|
| Cash offer | $407,500 |
| Less: mortgage payoff | − $210,000 |
| Less: back taxes (2 years) | − $14,000 |
| Less: HOA arrears | − $3,200 |
| Less: seller-side closing costs | − $5,000 |
| Net proceeds to seller | $175,300 |
Selling in Foreclosure: The Clock is Not Your Friend
One signed contract does not stop the clock. The auction proceeds unless you or the buyer contacts the trustee and proves the sale is closing. Get a specific escrow-closing date in writing. If your auction is 30 days out and the buyer needs 21 days to close, you have a 9-day margin. Any delay, a clouded title, a HELOC payoff window, a buyer who goes quiet, erases that margin.
A pending auction also compresses your negotiating room. Buyers know it. If you are in foreclosure, talking to multiple buyers simultaneously (covered below) is not just reasonable, it is necessary.
For more on the process in your specific county, see what to expect at closing.
How the Timeline Compares
| Stage | Cash Sale (days) | Traditional Listing (days) |
|---|---|---|
| Preparation | 0 | 30-90 |
| Offer received | 1-3 | 30-60 |
| Closing | 7-14 | 30-60 |
| Total | 8-17 | 90-210 |
Tax Implications You Need to Know Before Closing
A cash sale is still a sale. Two federal tax items apply:
Capital gains. If you have owned and lived in the home as your primary residence for at least two of the last five years, you may exclude up to $250,000 of gain ($500,000 if married filing jointly) under IRS Section 121. If you do not meet that threshold, because you inherited the property, it was a rental, or you have not lived there long enough, the gain is taxable. The IRS publishes the full rule at irs.gov/taxtopics/tc701.
Form 1099-S. The escrow or closing agent is required to file a 1099-S reporting the gross proceeds of the sale to the IRS. You will receive a copy. If you qualify for the Section 121 exclusion and the gain is fully excluded, you may not owe tax, but you still need to report the sale on Schedule D. Talk to a CPA before closing, not after.
Can You Run Multiple Buyers at the Same Time?
Before you sign, you are free to solicit offers from as many buyers as you want, compare them, and negotiate simultaneously. There is no legal or ethical problem with this. It is how you get a real market for your property.
After you sign one contract, you are under a binding agreement. Signing a second purchase agreement for the same property while the first is still active creates serious legal exposure.
Practical approach: give each buyer a 48-hour deadline to submit their best offer in writing with proof of funds attached. That deadline is credible, it filters out low-commitment buyers, and it gives you a clean comparison.
See common reasons homeowners sell for cash for context on why sellers in different situations approach this process differently.
Buyer-Vetting Checklist: Red Flags Before You Sign
1. No proof of funds. A legitimate buyer provides a bank letter within 24 hours of your request. The letter names the account holder and shows available liquid funds covering at least the offer amount.
2. Won’t visit the property. Every serious buyer inspects in person. A buyer who makes an offer sight-unseen and then requests access after you sign is setting up a post-inspection re-trade.
3. Pressures you to sign before you can get an attorney or title company involved. This is a hard stop.
4. Assignment not disclosed. Under AB 968 (effective January 1, 2024), wholesalers in California must disclose in writing that they intend to assign the contract. If they don’t,that is a statutory violation.
5. EMD below 1% of offer price. Low earnest money means low commitment. A buyer offering $1,000 EMD on a $400,000 house walks with almost no cost.
6. Vague closing date. “We’ll close in about two weeks” is not a closing date. Demand a specific calendar date with a written penalty for extension.
7. No physical address or entity name on the contract. You need to know who youare contracting with. An LLC is fine; a blank is not.
Is a Cash Sale Right for Your Situation?
A cash sale makes sense when speed or certainty outweighs that gap. Specifically:
- You have a foreclosure auction date inside 60 days.
- The property needs repairs you cannot finance or do not want to manage.
- You are handling an estate and need a defined close date.
- You are relocating and cannot carry two mortgages.
A homeowner in Riverside who closed with us in March 2026 described her situation this way: she had a Notice of Default with 44 days to auction, $190,000 in equity after mortgage payoff, and no capacity to list, stage, and wait. The cash close took 16 days. She cleared the auction and kept her equity. That is the case for a cash sale, specific, not generic. If none of those conditions apply to you, run the listing math first. The cash offer will still be there.
Frequently Asked Questions
How much faster is a cash sale? A clean-title cash sale closes in 8-17 days. A financed sale, including listing time, typically takes 90-210 days (NAR, 2023). Add 5-15 days to the cash timeline if you carry a HELOC.
Are there downsides to accepting a cash offer? Yes. The price is lower, industry estimates put the average discount at 8-15% below retail (Zillow Research, 2024), and wholesale discounts can run wider. Post-inspection renegotiation is a real risk. And if the buyer is a wholesaler who assigns the contract, the entity closing on your home may not be the one you met.
What is a Transfer Disclosure Statement (TDS) and do I need one? Yes. California Civil Code §1102 requires sellers to complete a TDS in virtually all residential sales, including as-is cash sales. You must disclose known material defects. “As-is” limits repair obligations; it does not eliminate disclosure obligations.
Do I owe taxes on a cash sale? Possibly. If the home was your primary residence for two of the last five years, IRS Section 121 may exclude up to $250,000 (or $500,000 married) of gain. File Schedule D either way. Confirm your specific situation with a CPA before closing.
